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Teradata, IBM Agree To Buy Digital Marketing Providers

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05/02/2012 | 09:13pm CEST

--Teradata and IBM each to buy marketing technology companies

--Both are targeting the area to help drive growth

--Deals expected to close this quarter

(Updates throughout with details about IBM's deal and analyst comments.)

 
   By Shara Tibken 
   Of  
 

Teradata Corp. (>> Teradata Corporation) and International Business Machines Corp. (IBM) on Wednesday each unveiled agreements to buy digital marketing technology companies, bolstering their offerings in the sector and heightening their rivalry.

Teradata said it agreed to buy German firm eCircle, which helps marketers create targeted digital campaigns through email, social media and mobile devices. Such cloud-based products allow customers, like European retailer Otto Group, to send personalized digital messages to their clients and boost revenue.

IBM, meanwhile, said hours after Teradata's announcement it is acquiring Tealeaf Technology, a provider of analytics software that helps organizations gain insight into consumer behavior online and on mobile devices. The technology allows marketers to glean real-time information to improve customer support and website usability, tailor marketing campaigns and increase online purchase conversion rates.

Neither company disclosed financial terms of their deals. Both acquisitions are expected to close in the current quarter.

Teradata and IBM--as well as other tech companies such as Oracle Corp. (ORCL)--compete in the market for data analytics, technology that helps companies sift through massive amounts of information to solve business problems or make predictions. Marketing is one of the main areas targeted for analytics, with many organizations seeking to automate and gain real-time insight into customer buying habits.

While the two acquired companies don't directly compete, they both fit into IBM and Teradata's overall rival strategies, Forrester analyst Rob Brosnan said.

"Both are looking to fill out different components of their marketing platforms," he said. "Marketers increasingly are spending a lot of their own budgets--on average, about 30%--on this marketing technology, and IBM and Teradata want to be where the money is."

The large technology providers have been active in acquiring companies in the sector. The eCircle buy marks Teradata's second marketing purchase in the past couple years. The company acquired marketing-management company Aprimo for $525 million in late 2010. And IBM, which has dubbed the area "smarter commerce," has spent more than $3 billion to acquire similar companies.

Teradata Chief Marketing Officer Darryl McDonald said the price his company is paying for eCircle isn't material to financial results, but the acquisition should "start being incremental to business" in 2013.

"We are very excited about the additional impact it will have on our business," McDonald said. "They have over 1,000 customers and have been growing in the 25% range over the last five years and profitable for the last five years."

Teradata plans to offer eCircle's technology as a standalone product, as well as integrate it with Teradata's Aprimo marketing-management business.

"By the end of the year, we'll have a fully integrated offering where we can do end-to-end campaign management," said Bob Boehnlein, president of Teradata's Aprimo business.

He said Teradata will now be able to not only run companies' marketing functions with its current applications but also deliver the messages marketers want to distribute. And Teradata will be able to use its business intelligence technology to analyze the effectiveness of the messages, grow existing customers, attract new customers and increase revenue.

eCircle's customer base is predominantly in Europe, but Teradata plans to expand its presence globally. Executives said the company will be setting up two data centers in the U.S. this year and replicating the technology for North America and South America customers. Next year, it will take a similar approach in Asia.

"This is a Big Data problem for marketing organizations and chief marketing officers," McDonald said. "And it's a big market opportunity for Teradata."

Tealeaf, meanwhile, has over 450 customers, including 30 of the Fortune 100 companies. Most of the customers, which include giants like Dell Inc. (DELL) and Wells Fargo & Co. (WFC), are in financial services, travel, retail and communications services. IBM said it plans to integrate San Francisco-based Tealeaf into its enterprise marketing and management group.

"With these new capabilities from Tealeaf, we can not only provide chief marketing officers and other marketing leaders the qualitative insights into how customers actually experience their brands, but show them how to react in real time across marketing, sales and service," Craig Hayman, IBM general manager of industry solutions, said in a press release.

-By Shara Tibken, Dow Jones Newswires; 212-416-2189; shara.tibken@dowjones.com

Stocks mentioned in the article : Teradata Corporation
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